Lawmakers Seek to Expand Health Care for Elderly

Rep. Robert T. Matsui, a certified liberal, could normally be counted an enthusiastic vote for a new social benefit--unlimited free hospital days for 32 million Medicare beneficiaries.

But Matsui (D-Sacramento) is hearing complaints from some senior citizens themselves about a bill, now in the final stages of congressional action, to protect the elderly from the catastrophic costs of long-term hospital stays. The reason: Middle- and upper-income people over 65 would be forced to pay for their own new benefit with a premium ranging up to a hefty $1,000 a year.

“A lot of lawmakers say privately it’s a lousy bill,” a reluctant Matsui said. “But it’s the only game in town, and in an election year they have to show they voted for something.”

This is the dilemma of Democrats in a time of budget scarcity: finding ways to pay for expanded health-care benefits for the growing elderly population.

Congress finds it extremely tempting to expand health-care benefits for the elderly, who represent a potent bloc of voters. Even as Senate and House conferees argue over the best way to finance the “catastrophic care” bill, the House appears ready to approve a bill establishing a major new program of home care for the frail and disabled.

Under that bill, as many as 2 million people might be eligible to get help at home, varying from light-duty nursing to cleaning and cooking. The bill would be financed by raising Medicare’s share of the payroll tax by $6 billion a year.

And many lawmakers fear that the new home-care program would ultimately cost much more than that. Chairman Dan Rostenkowski (D-Ill.) of the House Ways and Means Committee, angry that the House Democratic leadership allowed the bill to be scheduled for a House floor vote without any informational hearings in his committee, calls it “a giant nobody knows.”

Ambitious Packages

Other proposed legislative packages are even more ambitious. A bipartisan group of influential senators is pushing a $15-billion-a-year plan to pay not only for home care but also for that dreaded financial disaster, a long-term stay in a nursing home.

Financing for that bill would come from a hodgepodge of sources--increased alcohol and tobacco taxes, higher estate taxes and a stiffer Medicare payroll tax on the highest wage earners.

“The days are over when you say: ‘A social need must be addressed, and we will go tap the federal Treasury,’ ” said Rep. Ron Wyden (D-Ore.).

A Republican President and the big budget deficits have seen to that. When President Reagan gave his blessing in 1986 to “catastrophic care” legislation to limit the financial exposure of hospitalized Medicare recipients, he said the money could not come from general tax revenues.

More Expansive Plans

But the House and Senate separately fashioned more expansive plans than anything envisioned by the White House. Not only did they vote to abolish the requirement that the elderly begin contributing $135 a day to their hospital care after the first 60 days in the hospital, but they also extended Medicare coverage to prescription drugs and added new protections to help an additional 2 million poor people get better medical care.

“It’s a good expansion of benefits, and it’s financed for the first time by people paying according to their ability to pay,” said Rep. Pete Stark (D-Oakland), a key author of the House bill. “Quite frankly, we were driven by the budget. The Reagan Administration said no new taxes or increases in the budget, or they would veto it.”

The House-passed financing mechanism differs slightly from the corresponding provision in the Senate-passed bill. A House-Senate conference committee is expected to complete work this week on a compromise version of the bill.

Two Sources of Funds

The conference committee is likely to approve two sources of funds--a premium of $3 or $4 a month to be paid by every Medicare participant, and a sliding income-tax surcharge on the elderly that would cost more for those at the upper end of the income scale.

The surcharge, which would supply most of the funds, would fall only on the 40% of the elderly who pay federal income taxes--generally individuals with incomes of approximately $13,000 or more and couples earning $20,000 and up. Thus the most affluent of the elderly--an especially articulate segment of voters--would find themselves providing a medical benefit to the entire Medicare population.

“We can’t have things so burdensomely expensive that people feel they can’t pay for it,” said Rep. Henry A. Waxman (D-Los Angeles).

Rep. Bill Gradison (R-Ohio) warned that the “catastrophic care” program is only the beginning. And the elderly alone, he said, do not have the wherewithal to finance the additional programs that have been proposed.

Home-Care Bill

Next in line in the House is the home-care bill, whose chief author is Rep. Claude Pepper (D-Fla.), the 87-year-old chairman of the House Rules Committee. Standing behind Pepper is the 28-million-member American Assn. of Retired Persons.

Unlike the “catastrophic care” program, the Pepper bill’s financial burden would fall on the general public, not just the recipients of the benefits. The $6 billion a year would be raised by applying Medicare’s 1.45% share of the Social Security payroll tax to all wages, not just the first $45,000 a year.

“By removing the wage cap . . . we can help many of our most vulnerable citizens while affecting only the upper 5% (of) higher-income earners,” said Rep. Edward R. Roybal (D-Los Angeles), co-author with Pepper of the home-care bill.

In a bid to make the bill more politically attractive, it was broadened to offer home care to people of all ages, not just those over 65. Anyone who cannot independently perform two or more of the activities of daily living--eating, dressing, bathing, getting out of bed and using the toilet--would be eligible for government-financed help.

Passage Likely

The Pepper-Roybal bill is considered likely to be approved by the House despite opposition from Rostenkowski and a business coalition.

Small businesses, which must match their employees’ payroll tax payments, object to the bill’s higher payroll taxes, and insurance companies fear that the government would take away a budding market for home-care insurance. Voluntary hospitals fear that the program could soon outrun its cost estimates and force diversion of money from Medicare’s hospital trust fund.

Deborah Steelman, who is directing the Coordinating Committee for Long-Term Care Policy, as the coalition of opponents is known, hopes to stop the bill in the Senate. But she acknowledged that in an election year “there are many opportunities for it to go all the way.”

While the “catastrophic care” bill provides almost total protection for the elderly in hospitals and the Pepper-Roybal proposal offers financial help at home, neither deals with the most serious fiscal threat to the elderly: the cost of a lengthy stay in a nursing home, where bills average $24,000 a year.

Addressing ‘Real Problem’

“To the degree we siphon off funds by charging premiums for catastrophic care and spending money for a new home-care program, we don’t have any money left to address the real problem, the terrible costs of nursing homes,” warned Rep. William M. Thomas (R-Bakersfield). “We’re playing political games in Congress; we’re not talking about the real problems.”

Neither Medicare nor private insurance pays any meaningful share of the elderly population’s current expenses for custodial care in nursing homes.

Medicare does not cover the costs of those who are suffering from Alzheimer’s disease--a lingering, fatal brain deterioration--or lying helpless in bed after a stroke. Only after families have worked their savings down to $1,800 do family members become eligible for help under the Medicaid welfare program (Medi-Cal in California).

Costly for Middle Class

The middle-class elderly and their families now spend more out of their own pockets for nursing homes than they do for hospitals and physicians’ fees, which are largely financed by Medicare and private insurance.

“When I go back home,” said Sen. George J. Mitchell (D-Me.), “I hear people say: ‘The Republicans only care about the rich; you Democrats only care about the poor; what about us in between?’ ”

He responded with a legislative package combining home-care and nursing-home coverage. The government would pay nursing-home bills only after patients had been institutionalized for two years and, presumably, had spent about $50,000 of their own money.

Four out of five nursing-home patients stay less than two years, however, and the bill would do nothing for their financial burdens.

Mitchell admits that the two-year waiting period is arbitrary. “It reflects my best judgment on how we can keep public costs at a politically feasible level,” he said.

Even with the two-year waiting period for nursing home coverage, Mitchell’s package would cost at least $15 billion a year. He called this the best Congress could do to meet the demands of the elderly without outraging general taxpayers or unreasonably adding to the deficit.

“The days are gone,” he conceded, “when you can just add on benefits and say someone else will pay for it.”